Fannie Mae Directors Agree To Correct Accounting Treatments, Raise Capital Surplus As Required By OFHEO

September 27, 2004

WASHINGTON, D.C. — Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), has announced an agreement with the Fannie Mae Board of Directors requiring immediate action to address the improper accounting and inadequate controls detailed in OFHEO’s findings to date of its special examination.

The agreement requires Fannie Mae to:

  • Implement correct accounting treatments that will bring the Enterprise into compliance with SFAS 91 and SFAS 133 accounting standards.
  • Protect the existing capital surplus and move to a targeted capital surplus equal to 30% of their required minimum capital.
  • Undertake a top-to-bottom review of staff structure, responsibilities, independence of functions, compensation and incentives.
  •  Appoint an independent chief risk officer and separate other key business functions currently performed jointly by certain individuals or departments.
  • Put in place policies to assure adherence to accounting rules and new internal controls.
“The serious concerns raised in OFHEO’s report require prompt action,” said OFHEO Director Falcon. “This agreement is an important step toward resolving these concerns and helping to assure safe and sound operations at the Enterprise. I want to commend the Board of Fannie Mae for moving quickly to address a complex set of issues,” Falcon said.

The agreement provides specific steps and timetables. Other matters, raised by OFHEO’s examination, including management accountability, remain under active review.


Contact ALTA at 202-296-3671 or communications@alta.org.

SoftPro is the nation's leading provider of real estate closing and title insurance software. With more than 14,000 customer sites and over 60,000 users nationwide, this award-winning software offers a suite of products designed to increase your volume and revenue by reducing the time it takes to do closings. SoftPro has been recognized by the American Business Awards every year since 2007 - winning awards for Superior Customer Service, Support and Product Development. North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.